Cloud computing as an IT Outsourcing (ITO) strategy presents a viable business case for companies with traditional enterprise platforms, but the cloud’s utility is not apparent when compared to a virtualised setup, according to a study by global consulting and research firm Everest.
The study found that a buyer’s investment in a cloud infrastructure can save 40-50% over a traditional enterprise platform. The cloud proposition over enterprise setups is based on IT suppliers’ abilities to leverage scale to improve asset utilisation, lower costs for asset procurement, standardise delivery and processes, and offer labour flexibility to reduce labour support ratios and delivers services from less expensive locations.
However, large organisations running virtual datacentres may not find added value from cloud services unless IT demand is very volatile or through labour savings gained by large-scale sourcing options.
The firms said that enterprises face multiple challenges to adopting cloud computing such as fragmented application portfolios, lack of cloud standards, security, system performance and management control. In addition, security breaches, downtime, business disruption, and regulatory non-compliance issues pose significant concerns to buyers, and the research firm expects that broad-based standards won’t come for 18 months or longer.
According to the study, while internal applications workload and customer applications can be managed effectively from the cloud, the cloud hosting of customer applications is more difficult.
The study found that the common view of cloud computing overlooks Operations as a Service (OaaS), where cloud offerings are most logical and avoid several data privacy and security issues. The study suggests that operational services such as back-up, server monitoring, and license management can be standardised into self-contained units of IT operations services.
Ross Tisnovsky, vice president of research at Everest: “The IT industry is working to woo enterprise buyers to the cloud, and many suppliers are positioned to deliver on most of the cloud’s benefits. However, the cloud conundrum lies in the fact that IT demand best served by the cloud is also the most challenging to serve from the cloud. While cloud services offer a strong business case over a traditional enterprise setup, the buyer’s cloud adoption strategy should not be based on cost savings alone.
“Buyers also must factor in associated risks, which need to be understood in the early stages while evaluating long-term strategies and approaches to cloud computing.”
